Press Release

Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2020

March 4, 2021 at 10:46 PM EST

HOUSTON, March 4, 2021 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or "the Company") today announced financial results for its fourth fiscal quarter and year ended December 31, 2020.

In describing the Company's 2020 activities, Robert T. Ladd, Chairman and Chief Executive Officer of the Company, stated, "I am pleased to report that our portfolio has performed well throughout the unprecedented pandemic and that our net asset value has risen back above $14.00 per share. As we have just completed our eighth full year of operations, our shareholders have received $10.99 per share of dividends life-to-date. During 2020, we paid dividends of $1.15 per share and significantly improved our liquidity and available capital position through the upsize and extension of our bank facility through September 2025, the issuance in January 2021 of $100 million of 4.875% bonds due 2026 and the continued funding of equity into our second SBIC license. For 2021, we have seen an increase in investment opportunities and as a result have funded $58 million on a cost basis since year-end 2020, increasing our investment portfolio by $43 million over the same period, net of payoffs."

FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)



	Q4-20		YTD-20		Q4-19		YTD-19
	Amount	Per Share	Amount	Per Share	Amount	Per Share	Amount	Per Share

Net investment income	$4.99	$0.26	$21.99	$1.13	$6.89	$0.36	$22.44	$1.23

Core net investment income⁽¹⁾	$5.43	0.28	22.40	1.15	6.08	0.32	24.14	1.32

Net realized gain (loss) on investments	(7.69)	(0.39)	(10.13)	(0.52)	0.42	0.02	19.57	1.07

Total realized income⁽²⁾	(2.70)	(0.14)	11.86	0.61	7.31	0.38	42.00	2.30

Distributions⁽³⁾	-	-	(22.40)	(1.15)	(6.45)	(0.34)	(25.04)	(1.36)

Net unrealized appreciation
(depreciation) on investments	19.61	1.01	8.56	0.44	(5.45)	(0.29)	(15.50)	(0.85)

Provision for taxes on unrealized gains
on investments in taxable subsidiaries	(0.10)	(0.01)	(0.22)	(0.01)	(0.03)	(0.00)	(0.07)	0.00

Net increase in net assets resulting
from operations	$16.81	0.86	20.19	1.04	$1.83	0.10	26.44	1.45

Weighted average shares outstanding	19,486,003		19,471,500		18,926,817		18,275,696


(1)	Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.
(2)	Total realized income is the sum of net investment income and net realized gains on investments; both U.S. GAAP measures.
(3)	In 2020, fourth quarter dividends were declared in the third quarter.

PORTFOLIO ACTIVITY
($ in millions, except data relating to per share amounts and number of portfolio companies)


	As of	As of
	12/31/2020	12/31/2019
Investments at fair value	$653.4	$628.9
Total assets	$674.9	$648.5
Net assets	$273.4	$270.6
Shares outstanding	19,486,003	19,131,746
Net asset value per share	$14.03	$14.14




	Q4-20	YTD-20	Q4-19	YTD-19

New investments	$64.8	$152.0	$73.6	$246.5
Repayments of investments	(46.4)	(128.8)	(26.6)	(128.2)
Net activity	$18.4	$23.2	$47.0	$118.3


			As of	As of
			12/31/2020	12/31/2019

Number of portfolio company investments			66	63
Number of debt investments			51	51

Weight average yield of debt and other income producing investments (1)
Cash			7.8%	8.7%
Payment-in-kind ("PIK")			0.0%	0.0%
Fee amortization			0.5%	0.5%
Total			8.3%	9.2%

Weighted average yield on total investments (2)
Cash			7.4%	8.3%
PIK			0.0%	0.0%
Fee amortization			0.5%	0.5%
Total			7.9%	8.8%


(1)	The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors in shares of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.
(2)	The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

Results of Operations

Investment income for the year ended December 31, 2020 and 2019 totaled $56.7 million and $58.9 million, respectively, most of which was interest income from portfolio investments.

Operating expenses for the year ended December 31, 2020 and 2019, totaled $34.7 million and $36.5 million, respectively. For the same respective periods, base management fees totaled $11.1 million and $9.7 million, income incentive fees totaled $2.5 million and $5.8 million, capital gains incentive fees totaled ($0.4) million and $0.8 million, fees and expenses related to our borrowings totaled $16.0 million and $15.0 million (including interest and amortization of deferred financing costs), administrative expenses totaled $1.8 million and $1.7 million, income tax totaled $0.8 million and $0.9 million, and other expenses totaled $2.9 million and $2.6 million, respectively.

For the year ended December 31, 2020 and 2019, net investment income was $22.0 million and $22.4 million, or $1.13 and $1.23 per common share based on weighted average common shares outstanding of 19,471,500 and 18,275,696, respectively.

The capital gains incentive fee of ($0.4) million and $0.8 million for the year ended December 31, 2020 and 2019, respectively, was accrued for U.S. GAAP purposes due to the increase in realized and unrealized gains over the years. There can be no assurance that unrealized appreciation or depreciation will be realized in the future. Accordingly, such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $0.8 million and $0.9 million for the year ended December 31, 2020 and 2019, respectively, was accrued based on estimates of undistributed taxable income, which was generated largely from capital gains. Excluding these accruals, net investment income for the year ended December 31, 2020 would be $22.4 million, or $1.15 per share; and for the year ended December 31, 2019, net investment income would have been $24.1 million, or $1.32 per share.

The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the year ended December 31, 2020 and 2019, of $8.6 million and ($15.5) million, respectively. For the year ended December 31, 2020 and 2019, the Company had realized (losses) gains of ($10.1) million and $19.6 million, respectively.

For the year ended December 31, 2020 and 2019, net increase in net assets resulting from operations totaled $20.2 million and $26.4 million, or $1.04 per common share and $1.45 per common share, based on weighted average common shares outstanding of 19,471,500 and 18,275,696, respectively.

Liquidity and Capital Resources

As of December 31, 2020 and 2019, our amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $230.0 and $220.0 million, respectively, on a committed basis. As of December 31, 2020 and 2019, our Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 and $250.0 million, respectively. As of December 31, 2020 and December 31, 2019, we had $174.0 million and $161.6 million in outstanding borrowings under the Credit Facility, respectively.

For the for the year ended December 31, 2020, our operating activities used cash of $3.5 million primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments, For the same period, our financing activities provided cash of $5.8 million, primarily from proceeds from SBA-guaranteed debentures, net borrowings on our Credit Facility and proceeds from the issuance of shares of our common stock.

For the year ended December 31, 2019, our operating activities used cash of $93.3 million, primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments. For the same period, our financing activities provided cash of $92.0 million, primarily from proceeds from the issuance of shares of our common stock, proceeds from SBA-guaranteed debentures and net borrowings on our Credit Facility.

Distributions

During the three and twelve months ended December 31, 2020, we declared aggregate distributions for of $0.00 per share and $1.15 ($0 million and $22.4 million, respectively). Our fourth quarter regular dividend of $0.25 per share, along with a special dividend of $0.06 per share, were declared in the third quarter in order to maintain our qualification for taxation as a regulated investment company and to eliminate our liability for corporate-level U.S. federal income tax. During the three and twelve months ended December 31, 2019, we declared aggregate distributions of $0.34 and $1.36 per share ($6.5 million and $25.0 million, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. None of the dividends declared in 2020 are expected to include a return of capital.

Recent Portfolio Activity

For the quarter ended December 31, 2020, we funded $64.8 million in five new and eight existing portfolio companies and received $46.4 million from five repayments, paydowns and amounts received from equity investments. The new investment transactions and repayments that occurred during the quarter are summarized as follows:

On October 1, 2020, we received full repayment on the first lien term loan of C.A.R.S Protection Plus, Inc. for total proceeds of $7.4 million. We also received $0.4 million in full realization on the equity of the company, resulting in a $0.3 million gain.

On October 19, 2020, we invested $40 thousand in the equity of CF Topco LLC, an existing portfolio company.

On October 29, 2020 we received full repayment on the first lien term loan of Furniture Factory Outlet, LLC for total proceeds of $4.2 million, resulting in a $8.6 million loss. In addition, on November 5, 2020, our unsecured term loan investment in Furniture Factory Holdings, LLC and our equity investment in Furniture Factory Ultimate Holding, LP were terminated, resulting in a $0.3 million loss.

On October 30, 2020, we invested $0.1 million in the equity of Legacy Parent, Inc., an existing portfolio company.

On November 12, 2020, we invested $0.1 million in the equity of PCS Software, Inc, an existing portfolio company. On December 30, 2020, we invested $0.3 million in the revolver.

On November 20, 2020, we invested $12.5 million in the first lien term loan of CommentSold, LLC, an e-commerce platform that helps independent boutique shop owners sell products through mobile phone apps. Additionally, we committed $0.1 million in an unfunded revolver of the company.

On November 25, 2020, we received $1.3 million in full realization of the investment in Condor Top Holdco Limited, resulting in a $0.8 million gain. In addition, we received $0.2 million in full realization of the investment in Condor Holdings Limited, resulting in a $0.1 million gain.

On November 30, 2020, we received full repayment on the first lien term loan and revolver of Advanced Barrier Extrusions, LLC for total proceeds of $14.4 million. On the same day, we invested $17.5 million in a first lien term loan and $0.5 million in equity in the company.

On December 9, 2020, we invested $0.1 million in the revolver of Industry Dive, Inc, an existing portfolio company.

On December 11, 2020, we invested $0.1 million in the equity of Lynx FBO Investments, LLC, an existing portfolio company.

On December 21, 2020, we invested $11.5 million in the first lien term loan of CompleteCase, LLC, a provider of online uncontested divorce solutions in the U.S. (all 50 states) and Canada, Additionally, we committed $0.5 million in the equity of the company and $0.1 million in an unfunded revolver.

On December 21, 2020, we invested $10 million in the second lien term loan of Vortex Companies LLC, a provider of trenchless services and products to restore and repair large diameter water, sewer, and industrial pipe infrastructure.

On December 24, 2020, we received full repayment on the first lien term loan of Kelleyamerit Holdings, Inc. for total proceeds of $9.8 million, including a $0.03 million prepayment fee. On the same day, we invested $11.3 million in a first lien term loan of the company.

On December 24, 2020, we invested $30 thousand in the revolver of Invincible Boat Company LLC, an existing portfolio company.

On December 29, 2020, we invested $1.3 million in the delayed draw term loan of Venbrook Buyer, LLC, an existing portfolio company. Additionally, we invested $30 thousand in equity of the company.

Events Subsequent to December 31, 2020

On January 14, 2021, we received full repayment on the first lien term loan and revolver of BFC Solmetex, LLC for total proceeds of $13.6 million. We also received full repayment on the first lien term loan of Bonded Filter Co. LLC, a subsidiary of BFC Solmetex, LLC, for total proceeds of $1.2 million.

On January 29, 2021, we invested $11.3 million in the first lien term loan of NuSource Financial, LLC, a provider of technology integration and installation of Automated Teller Machines / Integrated Teller Machines ("ATM" / "ITM"), maintenance services, and security solutions. Additionally, we invested $4.8 million in the subordinated debt and warrants of the company.

On February 1, 2021, we invested $0.4 million in the equity of Tailwind Core Investor, LLC, an existing portfolio company.

On February 11, 2021, we invested $7.2 million in the first lien term loan of Time Manufacturing Acquisition, LLC, an existing portfolio company. Additionally, we invested $0.1 million in the equity of the company.

On February 19, 2021, we invested $13.5 million in the first lien term loan and committed $0.1 million in the unfunded revolver of CEATI International, Inc., a provider of intellectual content, technical trade programs, research groups, and conferences for utility companies. Additionally, we invested $0.3 million in the equity of the company.

On March 1, 2021, we invested $10.8 million in the first lien term loan and committed $0.1 million in the unfunded revolver of TAC LifePort Purchaser, LLC, a provider of aerospace products for the U.S. military / government, air medical, and high-end VIP aircraft end markets. Additionally, we invested $0.5 million in the equity of the company.

On March 2, 2021, we invested $10.0 million in the first lien term loan and committed $0.1 million in the unfunded revolver of TradePending, LLC, a provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships, primarily flagship dealerships. Additionally, we invested $0.8 million in the equity of the company.

2026 Notes

On January 14, 2021, the Company issued $100,000,000 in aggregate principal amount of 4.875% fixed-rate notes due 2026 (the "2026 Notes"). The 2026 Notes will mature on March 30, 2026, and may be redeemed in whole or in part at any time or from time to time at our option on or after December 31, 2025 at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest is payable semi-annually beginning September 30, 2021. The Company used the net proceeds from this offering to fully redeem the 2022 Notes and repay a portion of the outstanding amount under the Credit Facility.

Redemption of the 2022 Notes

On February 12, 2021, the Company redeemed all $48,875,000 in aggregate principal amount of the 2022 Notes. The 2022 Notes were redeemed at 100% of their principal amount, plus the accrued and unpaid interest thereon through the redemption date.

Credit Facility

The outstanding balance under the Credit Facility as of March 3, 2021 was $164.5 million.

SBA-guaranteed debentures

The outstanding balance of SBA-guaranteed debentures as of March 3, 2021 was $210.0 million.

SBIC II subsidiary

On January 21, 2021, we contributed $15.0 million to the Stellus Capital SBIC II, L.P., bringing total contributed capital to $35.0 million. On January 25, 2021, we increased committed capital to $60.0 million.

Dividend Declared

On January 15, 2021, the Company's board of directors changed the frequency of distributions from quarterly to monthly and declared a regular monthly dividend for each of January, February and March 2021 as follows:


Declared	Ex-Dividend Date	Record Date	Payment Date	Amount per Share
1/15/2021	1/28/2021	1/29/2021	2/16/2021	$	0.0833
1/15/2021	2/25/2021	2/26/2021	3/15/2021	$	0.0833
1/15/2021	3/30/2021	3/31/2021	4/15/2021	$	0.0833

Please refer to the website for regarding the U.S. federal income tax characteristics of our 2020 dividends. The information is posted on the website under Tax Information" (https://www.stelluscapital.com/public-investors/tax-information/).

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, March 5, 2021 at 10:00 AM, Central Standard Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W. Todd Huskinson, Chief Financial Officer, Chief Compliance Officer, Treasurer, and Secretary.

For those wishing to participate by phone, please dial 800-437-2398 (domestic). Use passcode 9096014. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Saturday, March 13, 2021 by dialing (888) 203-1112 and entering passcode 9096014. The replay will also be available on the Company's website.

For those wishing to participate via Live Webcast, connect via the Public Company (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.

Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, (713) 292-5414
Chief Financial Officer
thuskinson@stelluscapital.com

PART I — FINANCIAL INFORMATION

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


			December 31,		December 31,
			2020		2019
ASSETS
	Non-controlled, non-affiliated investments, at fair value
		(amortized cost of $658,628,966 and $642,707,824,
		respectively)	$	653,424,495	$	628,948,077
	Cash and cash equivalents			18,477,602		16,133,315
	Receivable for sales and repayments of investments			215,929		123,409
	Interest receivable			2,189,448		2,914,710
	Other receivables			25,495		25,495
	Deferred offering costs			90,000		—
	Prepaid expenses			487,188		368,221
		Total Assets	$	674,910,157	$	648,513,227
LIABILITIES
	Notes payable		$	48,307,518	$	47,974,202
	Credit facility payable			171,728,405		160,510,633
	SBA-guaranteed debentures			173,167,496		157,543,853
	Dividends payable			—		2,167,630
	Management fees payable			2,825,322		2,695,780
	Income incentive fees payable			681,660		1,618,509
	Capital gains incentive fees payable			521,021		880,913
	Interest payable			2,144,085		2,322,314
	Unearned revenue			523,424		559,768
	Administrative services payable			391,491		413,278
	Deferred tax liability			359,590		134,713
	Income tax payable			724,765		917,000
	Other accrued expenses and liabilities			174,731		203,461
		Total Liabilities	$	401,549,508	$	377,942,054
		Commitments and contingencies (Note 7)
		Net Assets	$	273,360,649	$	270,571,173
NET ASSETS
	Common stock, par value $0.001 per share (100,000,000 shares
		authorized; 19,486,003 and 19,131,746 issued and outstanding,
		respectively)	$	19,486	$	19,132
	Paid-in capital			276,026,667		272,117,091
	Accumulated undistributed deficit			(2,685,504)		(1,565,050)
		Net Assets	$	273,360,649	$	270,571,173
		Total Liabilities and Net Assets	$	674,910,157	$	648,513,227
		Net Asset Value Per Share	$	14.03	$	14.14

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

				For the		For the		For the
				year		year		year
				ended		ended		ended
				December 31,		December 31,		December 31,
				2020		2019		2018
INVESTMENT INCOME
	Interest income			$	55,350,781	$	56,895,990	$	51,463,033
	Other income				1,307,533		2,015,899		1,803,305
		Total Investment Income		$	56,658,314	$	58,911,889	$	53,266,338
OPERATING EXPENSES
	Management fees			$	11,084,450	$	9,703,706	$	8,154,842
	Valuation fees				290,445		265,103		307,838
	Administrative services expenses				1,781,603		1,691,764		1,390,375
	Income incentive fees				2,527,813		5,809,672		5,529,376
	Capital gains incentive (reversal) fees				(359,892)		799,876		81,038
	Professional fees				950,716		1,040,011		1,189,071
	Directors' fees				394,816		383,000		317,000
	Insurance expense				384,774		352,382		348,500
	Interest expense and other fees				15,950,087		14,976,024		12,338,755
	Income tax expense				771,134		903,905		275,106
	Other general and administrative expenses				890,465		547,637		697,900
		Total Operating Expenses		$	34,666,411	$	36,473,080	$	30,629,801
		Net Investment Income		$	21,991,903	$	22,438,809	$	22,636,537
	Net realized (loss) gain on non-controlled, non-affiliated
		investments		$	(10,129,859)	$	19,565,903	$	5,540,518
	Tax provision on realized gain on investment			$		$	—	$	(267,975)
	Net change in unrealized appreciation (depreciation)
		on non-controlled, non-affiliated investments		$	8,555,274	$	(15,501,951)	$	(1,706,549)
	Net change in unrealized appreciation
		on non-controlled, affiliated investments		$	-	$	2,185	$	60,000
	Provision for taxes on net unrealized gain
		on investments		$	(224,877)	$	(66,760)	$	(67,953)
		Net Increase in Net Assets
			Resulting from Operations	$	20,192,441	$	26,438,186	$	26,194,578
		Net Investment Income Per Share		$	1.13	$	1.23	$	1.42
		Net Increase in Net Assets Resulting
			from Operations Per Share	$	1.04	$	1.45	$	1.64
		Weighted Average Shares of Common Stock Outstanding			19,471,500		18,275,696		15,953,571
		Distributions Per Share		$	1.15	$	1.36	$	1.36

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

		For the year		For the year		For the year
		ended		ended		ended
		December 31,		December 31,		December 31,
		2020		2019		2018
Increase in Net Assets Resulting from
	Operations
Net investment income		$	21,991,903	$	22,438,809	$	22,636,537
Net realized (loss) gain on non-controlled,
	non-affiliated investments		(10,129,859)		19,565,903		5,540,518
Tax provision on realized gain on investments					—		(267,975)
Net change in unrealized appreciation (depreciation) on
	non-controlled, non-affiliated investments		8,555,274		(15,501,951)		(1,706,549)
Net change in unrealized appreciation on
	non-controlled, affiliated investments		—		2,185		60,000
Provision for taxes on unrealized appreciation
	on investments		(224,877)		(66,760)		(67,953)
Net Increase in Net Assets Resulting
	from Operations	$	20,192,441	$	26,438,186	$	26,194,578
Stockholder Distributions From:
	Net investment income	$	(22,402,959)	$	(10,000,000)	$	(16,418,007)
	Net realized capital gains		—		(15,038,173)		(5,272,543)
Total Distributions		$	(22,402,959)	$	(25,038,173)	$	(21,690,550)
Capital Share Transactions
	Issuance of common stock	$	5,023,937	$	45,862,239	$	94,788
	Sales load		(18,169)		(1,015,127)		—
	Offering costs		(5,681)		(521,715)		—
	Partial share transactions		(94)		755		(1,051)
Net Increase in Net Assets Resulting From
	Capital Share Transactions	$	4,999,993	$	44,326,153	$	93,737
Total Increase in Net Assets		$	2,789,476	$	45,726,166	$	4,597,765
	Net Assets at Beginning of Period	$	270,571,173	$	224,845,007	$	220,247,242
Net Assets at End of Period		$	273,360,649	$	270,571,173	$	224,845,007

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


			For the year		For the year		For the year
			ended		ended		ended
			December 31,		December 31,		December 31,
			2020		2019		2018
Cash flows from operating activities
Net increase in net assets resulting from operations			$	20,192,441	$	26,438,186	$	26,194,578
	Adjustments to reconcile net increase in net assets
		from operations to net cash used in operating activities:
		Purchases of investments		(152,007,165)		(246,438,384)		(272,927,459)
		Proceeds from sales and repayments of investments		128,627,422		128,206,318		147,528,448
		Net change in unrealized (appreciation) depreciation on investments		(8,555,274)		15,499,766		1,646,549
		Increase in investments due to PIK		(664,992)		(415,933)		(1,869,905)
		Amortization of premium and accretion of discount, net		(2,098,788)		(1,774,469)		(1,553,333)
		Deferred tax provision		224,877		66,760		67,953
		Amortization of loan structure fees		647,872		519,995		456,151
		Amortization of deferred financing costs		333,316		332,407		335,309
		Amortization of loan fees on SBA-guaranteed debentures		701,068		623,900		623,989
		Net realized loss (gain) on investments		10,129,859		(19,565,903)		(5,540,518)
	Changes in other assets and liabilities
		Decrease (increase) in interest receivable		725,262		873,974		(866,480)
		Decrease (increase) in other receivable		-		59,751		(85,246)
		(Increase) decrease in prepaid expenses		(118,967)		(23,600)		16,649
		Increase in management fees payable		129,542		511,805		562,383
		(Decrease) increase in incentive fees payable		(936,849)		(318,029)		1,564,891
		(Decrease) increase in capital gains incentive fees payable		(359,892)		799,875		81,038
		(Decrease) increase in administrative services payable		(21,787)		21,087		65,158
		(Decrease) increase in interest payable		(178,229)		458,748		842,393
		(Decrease) Increase in unearned revenue		(36,344)		149,175		271,289
		(Decrease) increase in income tax payable		(192,235)		600,908		316,092
		(Decrease) increase in other accrued expenses and liabilities		(28,730)		87,559		(152,511)
Net Cash Used In Operating Activities			$	(3,487,593)	$	(93,286,104)	$	(102,422,582)
		Cash flows from Financing Activities
		Proceeds from the issuance of common stock	$	4,794,994	$	45,862,239	$	-
		Sales load for common stock issued		(18,169)		(1,015,127)		-
		Offering costs paid for common stock		(95,681)		(503,042)		(18,673)
		Stockholder distributions paid		(24,341,646)		(24,678,113)		(21,594,863)
		Proceeds from SBA Debentures		15,500,000		11,000,000		60,000,000
		Financing costs paid on SBA Debentures		(577,425)		(467,850)		(2,055,000)
		Borrowings under Credit Facility		120,950,000		245,750,000		246,300,000
		Repayments of Credit Facility		(108,500,000)		(183,750,000)		(187,500,000)
		Financing costs paid on Credit facility		(1,880,099)		(246,589)		(351,403)
		Partial share transactions		(94)		755		(1,051)
Net Cash Provided by Financing Activities			$	5,831,880	$	91,952,273	$	94,779,010
Net Increase in Cash and Cash Equivalents			$	2,344,287	$	(1,333,831)	$	(7,643,572)
	Cash and cash equivalents balance at beginning of period			16,133,315		17,467,146		25,110,718
Cash and Cash Equivalents Balance at End of Period			$	18,477,602	$	16,133,315	$	17,467,146
Supplemental and Non-Cash Activities
	Cash paid for interest expense		$	14,441,061	$	13,035,976	$	10,075,913
	Excise tax paid			940,000		280,000		27,717
	Shares issued pursuant to Dividend Reinvestment Plan			228,943		-		94,788
	(Decrease) increase in dividends payable			(2,167,630)		360,060		899
	Increase (decrease) in deferred offering costs			90,000		(18,673)		18,673

Reconciliation of Core Net Investment Income
(Unaudited)

		Year	Quarter
		ended	ended
		December 31, 2020	December 31, 2020
Net investment income		$21,991,903	$4,987,881
	Capital gains incentive fee	$(359,892)	$521,021
	Income tax expense	$771,134	$(82,497)
Core net investment income⁽¹⁾		$22,403,145	$5,426,405

Per share amounts:
Net investment income per share		$1.13	$0.26
Core net investment income per share⁽¹⁾		$1.15	$0.28

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SOURCE Stellus Capital Investment Corporation